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Mining sector third best

Mon, 10 June 2013 03:13
by Special Correpondent
Business

The Namibian mining sector has been rated by the Fraser Institute as the third most attractive investment hub in the continent after Morocco and Botswana despite the negative perceptions about safety and legislation.
The Fraser Institute looks at the mining industry worldwide and bases its ratings on the relationship between the industry and Government, availability of labour and skills, uncertainty concerning the administration and interpretation or enforcement of existing regulations.
Sixteen African countries and some from the Sadc were made rated.
Globally, the Namibian mining sector in terms of performance accessibility to investors, minimum Government interference and contribution to the foreign earnings has been placed at number 30.
This is despite the fact that the billion dollar extractive sector in the country experiences a shortage of locals playing a part in it and also witnessed five deaths last year and two so far.
According to the Fraser Institute, the Namibian extractive sector is above that of South Africa which is at number eight because of volatile labour relations and nationalisation fears.
The Fraser Institute pronouncements come barely two weeks after the Chamber of Mines of Namibia released a report on the country’s outdated mining laws that need a thorough relook if they are in any way going to reduce work related accidents at the different mining sites.
The mining industry has also been scruitinised for having a large compliment of their workforce exposed to potential work-related accidents because they do not understand how to operate large mobile diesel equipment in underground mines.
This was also confirmed recently by a Chartered professional from the Australian Institute of Mining and Metallurgy in his study of the mining sector where he revealed that most of the accidents in the industry are largely caused by human behaviour for misunderstanding the duties they are expected to carry out.
In comparison to other rich mining countries, Namibia is the world’s fourth largest producer of uranium, seventh largest diamond producer and contributes a combined eight to 10% of the country’s gross domestic product (GDP).
Commenting on the issue, Chamber of Mines of Namibia chief executive officer, Veston Malango said that the rating was a welcome development.
“This is a welcome development for the sector. It will do well in building confidence to both the players and potential investors. However, I will also need to get more details concerning this issue when I return to the country as I am on leave.”
Although he could not give more information, Malango also said: “There is also need to closely look at the findings of the report in order to see how best the country can continue improving its fattest cash cow.”
Although the Fraser Institute benchmarks Namibia high in terms of attractiveness to investors and guarantees return on investments, it also takes a swipe at safety within the sector and emphasises great need for the creation of relevant legislation guiding operations in the sector to safeguard workers from  associated risky at work.
According to the Fraser Institute, the mining sector will be the country’s economic backbone for a longer period than expected and in fact it now contributes 55% of all foreign earnings to the country.
The mining sector is also applauded for being the second largest formal employer from Government although in the recent past companies like Rossing Uranium have been shedding their staff because of a growing uncertainty in world commodity pricing.
The mining sector accrued about N$18.52b in total sales turnover between 2011 and 2012 with N$2.93b of that going towards salaries and wages for the workforce engaged in the extractive industry.
The Fraser Institute also corroborates statics released by the Chamber of Mines two weeks ago showing that the extractive sector contributed N$3.3b in fixed investments within the period 2011-2012, spent N$434m in exploration activities which shows a brighter future for the country in terms of potential investments and is the fastest growing sector.
In this regard, exploration within the period under review was spearheaded by B2Gold which used N$ 57.8m, Bannerman N$51.7m, Reptile N$70.7m and Swakop Uranium which used N$76.2m.
The mining sector also contributed N$1.12b to the Government in profit tax, N$957m in royalties summing up its total contribution to treasury to a whooping N$2.08b.
Government interference
Although the Fraser Institute concludes that the mining industry in the country compares to any other in the world in terms of efficiency and ability to grow, it also points out that there seems to be a growing conflict between the Government and the industry.
This is largely so because in the past the two have been at each other’s throats with the Government coming up with strategies to earn more in terms of taxes while the extractive sector has always complained that the move would cripple production.